Ethan Jones is an investment broker. Recently he contacted potential investors and offered to sell them bonds that were paying an 8% annual rate of interest. He noted that the bonds were paying a much higher return than other investments and that similar bonds were selling at a real rate of 6% interest. The bonds had a 10-year maturity and paid interest semiannually. Several investors purchased the bonds because of the high rate of interest but later were concerned to learn that the maturity value of $1,000 per bond was considerably less than the $1,350 they had paid for each bond.

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Compare the price of the bonds sold by Ethan to bonds yielding a real rate of 6%. What was the approximate real rate of return earned by the investors? Did they have a right to be concerned about their investments? Do you see any ethical problems with Ethan's sales pitch?